The federal government’s fuel security package in last week’s budget will protect fuel stocks, retain existing employment and create future construction jobs, Prime Minister Scott Morrison says.
Building on a $211 million commitment in last October’s budget, the latest instalment includes up to $302 million for major refinery infrastructure upgrades.
Mr Morrison says locking in Australia’s fuel security will deliver benefits for all Australians.
- Read more: What’s in the Budget for you?
“This is a key plank of our plan to secure Australia’s recovery from the pandemic and to prepare against any future crises,” he said in a statement.
The PM said the funding aims to maintain a self sufficient refining capability in Australia by supporting the operation of the Ampol refinery in Lytton, Queensland and the Viva refinery in Geelong.
The package will protect the jobs of 1250 direct employees across the two refineries and create another 1750 construction jobs.
“Earlier investment in Australia’s ability to produce better quality fuels, including ultra-low sulphur levels, will also improve air quality and deliver an estimated $1 billion in lower health costs,” Mr Morrison said.
“Major industries like agriculture, transport and mining, as well as mum and dad motorists, will have more certainty and can look forward to vehicle maintenance savings and greater choice of new vehicle models.”
Minister for Energy and Emissions Reduction Angus Taylor said Australia’s economy was reliant on fuel.
“Fuel is what keeps us and the economy moving. That is why we are backing our refineries,” Mr Taylor said.
The 2021/22 budget initiatives include:
- A variable Fuel Security Service Payment (FSSP*) to the refineries, funded by the government, which recognises the fuel security benefits refineries provide to all Australians
- Up to $302 million in support for major refinery infrastructure upgrades to help refiners bring forward the production of better-quality fuels from 2027 to 2024
- $50.7 million for the implementation and monitoring of the FSSP and the minimum stockholding obligation (MSO), ensuring industry complies with the new fuel security framework.
The variable FSSP has been costed up to $2.05 billion to 2030 in a worst-case scenario, which assumes both refineries are paid the highest rate over the entire nine years in COVID19-like economic conditions, which is unlikely as the economy recovers.